Rising employment costs and tighter labour regulations are prompting many UK businesses to rethink how and where they hire. With employers facing higher National Insurance contributions and new workers’ rights legislation, some companies are increasingly turning to remote workers abroad to remain competitive. South Africa, in particular, has emerged as a popular destination for talent due to its strong English-speaking workforce and lower employment costs.
Read the full article on City AM: “UK firms dodge Labour tax raid with WFH roles abroad”
Many UK businesses have started to look to hiring overseas talent, like that in South Africa, to avoid Rachel Reeves’ £20 billion tax raid on employers and stringent workers’ rights. While employers have looked abroad to hire staff working in areas such as customer service, a new surge in companies specialising in the recruitment of people in English-speaking countries suggests firms are looking to go offshore to avoid hefty employers’ national insurance contributions (NICs) bills.
The Legends Agency, a recruitment company that hires workers in South Africa before they are sub-contracted at UK companies, has led this shift. Over the past year, their revenues have surged from £300,000 to £7.2 million. Alex Fenton, the Legends Agency’s London-based director, has said, “This used to be only for big business. Now, what’s happened to the small and medium enterprise (SME) market being priced out, you add that to the fact that you can get remote work, which has been proven to work in many instances, SMEs certainly can do it.”
Besides the high skill of South African workers, UK businesses enjoy a significant cost saving when hiring them. 1% levy is charged on workers earning more than around £20,700 a year, compared to the UK’s 15% rate on a salary threshold of £5,000 a year following last year’s Autumn Budget.
Sauce, a recruitment agency, has reported that IT specialists and sales representatives working virtually in South Africa can earn up to 70 per cent less in wages as the cost of living across both countries differs dramatically. Tony Redondo of Cosmos Currency Exchange has also commented, saying that he seen a 43% increase in overseas payments over the last six months.
“The feedback from many of my business clients is also to hire overseas remote workers when it’s feasible,” Redondo said. “It’s partly down to taxes, partially down to the new Employment Rights Bill.”
The growing trend of hiring remote workers overseas highlights how businesses are adapting to changing economic and regulatory conditions in the UK. For many companies, tapping into international talent pools offers a practical way to control costs while maintaining productivity. However, the shift also raises important questions about the long-term impact on the UK labour market and domestic job opportunities. As remote work continues to reshape the global workforce, businesses and policymakers alike will need to consider how to balance competitiveness with support for local employment.
